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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] South Korea’s financial authorities have come under fire for fairness concerns after distributing detailed guidelines on the Reshoring Investment Account (RIA) through a process that favored large securities firms, an Edaily investigation has found.
According to the financial investment industry and the Financial Supervisory Service (FSS) on the 25th, the FSS earlier this month convened a closed-door meeting with only a select group of securities firms to discuss draft RIA guidelines. The meeting reportedly included major brokerages with large overseas equity trading volumes, such as Samsung Securities, Korea Investment & Securities, and Kiwoom Securities.
Participants reviewed draft materials presented by the regulator and conveyed industry feedback on issues such as RIA account opening procedures and system development requirements. Based on the feedback gathered at the meeting, the FSS finalized the guidelines and recently distributed them to all approximately 60 member firms through the Korea Financial Investment Association.
However, controversy has arisen as many mid-sized and smaller brokerages—particularly those with relatively limited overseas stock operations—were excluded from the initial discussions.
An official at a securities firm, speaking on condition of anonymity, said, “If this is a government-driven policy initiative, the process should be transparent and open to all market participants. Finalizing detailed requirements first and disclosing them later raises serious fairness concerns.”
Another industry official warned that the RIA framework could be designed in a way that disproportionately favors large brokerages, adding that smaller firms may face delays in developing RIA-related products compared with their larger peers.
The RIA is a government initiative aimed at redirecting overseas investment funds back into the domestic stock market and stabilizing the won. Under the scheme, investors who sell overseas stocks and reinvest the proceeds—converted into Korean won—into domestic equities are eligible for capital gains tax deductions on overseas stock sales.
The Ministry of Economy and Finance plans to introduce the RIA through the February extraordinary session of the National Assembly. The tax deduction rate varies depending on the timing of the sale: 100% of capital gains if sold by the end of March this year, 80% if sold by the end of June, and 50% if sold by year-end. The eligible overseas stock sale amount is capped at KRW 50 million per individual.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
